The rupee’s sharp decline against the US dollar to Rs 51 level worried investors that it will inflate government’s import bill,especially on account of oil,worsening fiscal deficit situation.

Besides,reminiscent of the 2G spectrum allocation scam,the Comptroller an Auditor General (CAG) said in a draft report that the government lost Rs 10.67 lakh crore on account of allotment of coal blocks to 100 private and public sector companies without auction during 2004-2009.

However,CAG later informed the Prime Minister that media reports on alleged coal scam were “exceedingly misleading”.

Sensex moved in a narrow range till late afternoon,but last hour selling pulled it down sharply to 17,196.47,erasing 405.24 points or 2.30 per cent. In last two days,it had risen 328.34 points or 1.90 per cent.

Asian stocks were down in early trade after a survey showed China’s manufacturing has shrunk. Key indices in China,Singapore and South Korea finished with marginal losses,although Hong Kong,Japan and Taiwan ended with gains.

European markets were trading sharply lower in the afternoon. CAC (France),DAX (Germany),FTSE (UK) were down by up to 1.52 per cent. The US index futures too were indicated weak opening today.